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Some Trader Has Made A Very Big Bet That Something Very Bad Will Happen Within The Next 60 Days
TBI ^ | 2-6-2013 | Sam Ro

Posted on 02/06/2013 7:21:55 AM PST by blam

Some Trader Has Made A Very Big Bet That Something Very Bad Will Happen Within The Next 60 Days

Sam Ro
February 6,2013

CNBC

Stocks have been rallying relentlessly to post-crisis highs.

Meanwhile, the volatility index (aka the VIX, aka the "fear index") is near historic lows.

But according to UBS's Art Cashin, some options trader has made an enormous $11.25 million bet that the VIX will explode higher very soon.

And a rally in the VIX is usually accompanied by a drop in the stock markets.

From this morning's Cashin's Comments (emphasis ours):

A Very Big Bet In A Somewhat Unlikely Instrument – My friend, Jim Brown, the ever-alert consummate professional over at Option Investor pointed us to a rather unusual trade. Here's what he wrote in last night's edition of his valuable newsletter:

In past years I have reported on trades that were so large it appeared someone had inside knowledge of a pending event. Sometimes those were massive put positions on the S&P. A new trade just appeared that suggests there will be a market event in the near future. Last week somebody put on a call spread on the VIX using the April 20 and 25 puts. They bought 150,000 contracts for a net of $75 per contract. That is an $11,250,000 bet that the VIX will move over 20 over the next 60 days. You would have to be VERY confident in your outlook to risk $11 million on a

(snip)

Jim then goes on to list some of the scheduled events and deadlines visible over the next 60 days (mostly in Washington). When you add in the broad variety of geo-political possibilities, it's a decent reason to stay extra alert.

Hopefully, this person is wrong.

(Excerpt) Read more at businessinsider.com ...


TOPICS: News/Current Events
KEYWORDS: investing; markets; short; shortthemarket; stocks; vix
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1 posted on 02/06/2013 7:22:03 AM PST by blam
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To: blam

Wonder what his Freeper name is...


2 posted on 02/06/2013 7:25:53 AM PST by Abathar (Proudly posting without reading the article carefully since 2004)
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To: blam

Well that is a very specific headline


3 posted on 02/06/2013 7:31:33 AM PST by GeronL (http://asspos.blogspot.com)
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To: blam

Maybe it’s a fund that has several hundred million in bull market investments and they’re hedging.


4 posted on 02/06/2013 7:34:01 AM PST by Flightdeck (My four children have been robbed)
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To: blam

Sounds like something Soros would do.


5 posted on 02/06/2013 7:35:12 AM PST by Falcon4.0
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To: GeronL; blam

We know what it is. The Romans named the third month of the year March for it.


6 posted on 02/06/2013 7:35:23 AM PST by Perdogg (Mark Levin - It's called the Bill of Rights not Bill of Needs)
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To: blam

11,25 mill? That’s a “very big” event?

Ummm...


7 posted on 02/06/2013 7:36:07 AM PST by Hardraade (http://junipersec.wordpress.com (Vendetta))
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To: blam

It’s this right after Q1 results come out?


8 posted on 02/06/2013 7:36:38 AM PST by WakeUpAndVote
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To: blam
"...April 20 and 25 puts"

Someone wealthy is expecting trouble April 19th.

9 posted on 02/06/2013 7:39:01 AM PST by SENTINEL (Kneel down to God. Stand up to tyrants. STICK TO YOUR GUNS !)
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To: Abathar

Blam. ;)

Actually, rich people have backed whacked ideas and lost their shirts on all sorts of stuff. There is a meteor passing rather close to us in a week or so.


10 posted on 02/06/2013 7:39:03 AM PST by cuban leaf (Were doomed! Details at eleven.)
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To: blam

I have learned to pay close attention to things like this posted on FR.

I remember reading the first indications of the mortgage crisis here on FreeRepublic. I also recall reading about the unusual shorting of Munich Re in early September of 2001 - prior to 9/11.


11 posted on 02/06/2013 7:39:28 AM PST by LouD
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To: blam

Seen this happen before. Usually before some terrorist incident. Happened for 911.


12 posted on 02/06/2013 7:41:37 AM PST by American in Israel (A wise man's heart directs him to the right, but the foolish mans heart directs him toward the left.)
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To: Hardraade

That was my thought as well.


13 posted on 02/06/2013 7:42:07 AM PST by Cringing Negativism Network
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To: Hardraade

I suspect that, in proportion to normal trading in that index, it is a big bet, particularly in futures, which are by their nature a leveraged investment.


14 posted on 02/06/2013 7:42:11 AM PST by LouD
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To: blam; F15Eagle; Jeremiah Jr; Eleutheria5; 2ndDivisionVet
Jim then goes on to list some of the scheduled events and deadlines visible over the next 60 days (mostly in Washington). When you add in the broad variety of geo-political possibilities, it's a decent reason to stay extra alert.

Did the list include that

>>>The White House has confirmed that Obama is planning his first trip to Israel since being elected president in March. He will also visit Jordan and the Palestinian Authority’s seat of power in Ramallah. <<<

‘Israel Thirsts to Hear Obama Directly’


15 posted on 02/06/2013 7:43:28 AM PST by Ezekiel (The Obama-nation began with the Inauguration of Desolation.)
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To: blam
Obama surrender US sovereignty to UN in his State of the Union address.
16 posted on 02/06/2013 7:44:15 AM PST by Sir Napsalot (Pravda + Useful Idiots = CCCP; JournOList + Useful Idiots = DopeyChangey!)
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To: blam

Soros.


17 posted on 02/06/2013 7:46:53 AM PST by bgill
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To: blam

When I look at stocks on my brokerage site I see ratings from about six different rating agencies. Sometimes they agree on buy or sell and sometimes they are all over the map. Sometimes I get good advice from Blam:)


18 posted on 02/06/2013 7:52:16 AM PST by Cold Heart
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To: SENTINEL
Someone wealthy is expecting trouble April 19th.

Waco slaughter, and the Oklahoma bombing as revenge for it. Both 19th.
19 posted on 02/06/2013 8:01:28 AM PST by ZX12R
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To: cuban leaf
"There is a meteor passing rather close to us in a week or so."

Astronomers Have Never Seen An Asteroid This Big Come So Close To Earth


20 posted on 02/06/2013 8:03:11 AM PST by blam
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To: cuban leaf
I'm thinking sequestration...when the defense contractors start announcing hundreds of thousands of lay-off, the market will tank.(?)

BOFA ANALYST: 3 Reasons Why Investors Are Too Complacent About The Upcoming Sequester

My son is a 12 year employee physicist(PhD) for a defense contractor and he's concerned.

21 posted on 02/06/2013 8:12:32 AM PST by blam
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To: blam
Last week somebody put on a call spread on the VIX using the April 20 and 25 puts.

This is balony ... if you are entering a long or short CALL spread position, you are using CALLS ... not PUTS.

22 posted on 02/06/2013 8:17:40 AM PST by dartuser ("If you are ... what you were ... then you're not.")
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To: blam

People don’t realize that when spending is cut, jobs are cut. That is where money goes when it is “spent”. If you cut spending drastically, there will be a lot of layoffs. The problem we now have is that the FedGov now has a sembiotic relationship with the private sector’s economy. If the government really does all the cuts us conservatives would like, it would destroy the economy.

In fact, the only thing they can do that does NOT destroy the economy is kick the can and try to inflate us out of this. Problem is, that destroys it too. It just happens later.

It’s why I say there is no human solution to this. We are in this all the way to the bottom. And it is not just the US. It is the world’s entire economy/civilization. This will leave a mark.


23 posted on 02/06/2013 8:17:48 AM PST by cuban leaf (Were doomed! Details at eleven.)
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To: Abathar; The Comedian
Wonder what his Freeper name is...

The Comedian...

24 posted on 02/06/2013 8:21:09 AM PST by null and void (Gun confiscation enables tyranny. Don't enable tyranny.)
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To: blam

It is a very leveraged bet against market complacency. Makes perfect sense since, by all historic measures, the stock market is at a record level of overconfidence. Although the options expire in 60 days, the buyer has to see a strong market move (probably down) much sooner than that or the option value will have been lost.


25 posted on 02/06/2013 8:26:34 AM PST by zagger
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To: ZX12R
Waco slaughter, and the Oklahoma bombing as revenge for it. Both 19th.

Little fracas in the vicinity of Lexington, MA, and then in Concord, MA, as well. 1775 or thereabouts.

26 posted on 02/06/2013 8:30:24 AM PST by Hemingway's Ghost (Spirit of '75)
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To: ZX12R; SENTINEL
SENTINEL ~ Someone wealthy is expecting trouble April 19th.

ZX12R ~ Waco slaughter, and the Oklahoma bombing as revenge for it. Both 19th.

While not disagreeing with an April 19 date, I think the big event will be later.

The Benghazi attack was timed to blur the focus on, to steal a little power from, to overwrite the big event a decade earlier.

Oklahoma City was to take back the date from Waco.

The most horrible date in human history (according to anyone invested in dominating others) is July 4th.

That's the day the real trouble starts.

27 posted on 02/06/2013 8:33:27 AM PST by null and void (Gun confiscation enables tyranny. Don't enable tyranny.)
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To: blam

If it’s a VERY big event it might be so big that he won’t get paid. So said trader is hoping for something bad but not too bad so as to take the financial system down with it. Just sayin’.


28 posted on 02/06/2013 8:39:05 AM PST by 2 Kool 2 Be 4-Gotten
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To: Hardraade

$11.25 million in an option is pretty big as their is a multiplier effect of the option. It’s not a straight trade.


29 posted on 02/06/2013 8:43:01 AM PST by Wyatt's Torch (I can explain it to you. I can't understand it for you.)
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To: cuban leaf
"It’s why I say there is no human solution to this. We are in this all the way to the bottom. And it is not just the US. It is the world’s entire economy/civilization. This will leave a mark."

Ditto. We're still in sync.

30 posted on 02/06/2013 9:17:42 AM PST by blam
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To: blam

The Norks are getting to test their big boom rocket thingy.


31 posted on 02/06/2013 9:23:55 AM PST by vanilla swirl (searching for something meaningful to say)
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To: blam

Something terrible has ALREADY happened. Around November last year. The RATS stole the election and are still in power.


32 posted on 02/06/2013 9:30:55 AM PST by Nateman (If liberals are not screaming you are doing it wrong!)
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To: blam

Possibly simply hedging some other bets that rely on a market drop?


33 posted on 02/06/2013 9:32:44 AM PST by 9YearLurker
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To: vanilla swirl
Yep. We reported the last test as an epic fail.

Not much of a boom, more of a *pop* exactly what a neutron bomb is supposed to do.

Are the Norks skipping over the big boom stage of development and going directly for neutron bomb and Super-EMP weapons?

They have already demonstrated the ability to orbit a payload.

34 posted on 02/06/2013 9:36:19 AM PST by null and void (Gun confiscation enables tyranny. Don't enable tyranny.)
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To: null and void

Used to see his posts all the time


35 posted on 02/06/2013 9:42:15 AM PST by F15Eagle (1 John 5:4-5, 4:15, 5:13; John 3:17-18, 6:69, 11:25, 14:6, 20:31; Rom10:8-11; 1 Tim 2:5; Titus 3:4-5)
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To: F15Eagle; The Comedian

Yes. He has utterly vanished. Not just from FR, either.

There are few things on earth I would like more than to hear from him.


36 posted on 02/06/2013 9:49:03 AM PST by null and void (Gun confiscation enables tyranny. Don't enable tyranny.)
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To: dartuser

Nope - They bought the april 20 calls and sold the april 25 puts.

This reduces the cost of the bet by trimming the upside potential.


37 posted on 02/06/2013 9:51:45 AM PST by Triple (Socialism denies people the right to the fruits of their labor, and is as abhorrent as slavery)
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To: blam
Reason # 156 why you should never let business writers write a science article:

That article notes that the asteroid will reach the closest point at about 2:24 Eastern time.

They don't bother to say WHAT DAY. Just sometime "next week".

38 posted on 02/06/2013 10:09:10 AM PST by Izzy Dunne (Hello, I'm a TAGLINE virus. Please help me spread by copying me into YOUR tag line.)
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To: null and void

Wow. Bummer.


39 posted on 02/06/2013 10:22:39 AM PST by F15Eagle (1 John 5:4-5, 4:15, 5:13; John 3:17-18, 6:69, 11:25, 14:6, 20:31; Rom10:8-11; 1 Tim 2:5; Titus 3:4-5)
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To: null and void; MestaMachine; thouworm; Rushmore Rocks; Oorang; txnuke; jersey117; Godzilla; ...
*

Some Trader Has Made A Very Big Bet That Something Very Bad Will Happen Within The Next 60 Days

Pinging All.

Check out comments, too.

.

40 posted on 02/06/2013 10:47:10 AM PST by LucyT (In the 20th century 200 million people were killed by their own governments.)
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To: Nateman
"Something terrible has ALREADY happened. Around November last year. The RATS stole the election and are still in power.

It's even scarier for me...I think they won it.

41 posted on 02/06/2013 11:23:21 AM PST by blam
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To: null and void

Yeah I miss him too.


42 posted on 02/06/2013 11:30:08 AM PST by autumnraine (America how long will you be so deaf and dumb to the tumbril wheels carrying you to the guillotine?)
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To: null and void
"Yes. He has utterly vanished. Not just from FR, either."

Same thing happened to FReeper RightWhale...here one day, gone forever the next. No-one knows anything.

43 posted on 02/06/2013 11:31:16 AM PST by blam
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To: blam

If they bought puts they’d be betting that the VIX would go down, not up.


44 posted on 02/06/2013 11:34:38 AM PST by Royal Wulff
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To: blam; autumnraine; The Comedian; RightWhale
Same thing happened to FReeper RightWhale...here one day, gone forever the next. No-one knows anything.

Not quite, The Comedian told us he was going to vanish from FR, then he did.

I just didn't think his web site, email and phone would all go dark as well.

I think of RightWhale every time Alaska is in the news.

45 posted on 02/06/2013 11:37:01 AM PST by null and void (Gun confiscation enables tyranny. Don't enable tyranny.)
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To: blam
FWIW-

$11 million isn't that big of a bet on Wall Street.

What's interesting is the chosen trading vehicle...

This is the 3rd or 4th time...I've heard someone say...in the next 60 days..something big will happen.

We shall see..........

46 posted on 02/06/2013 11:38:21 AM PST by Osage Orange (MOLON LAVE)
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To: Osage Orange

HMM


47 posted on 02/06/2013 11:53:36 AM PST by txhurl
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To: Osage Orange

Beware the Ides of March...


48 posted on 02/06/2013 12:06:54 PM PST by null and void (Gun confiscation enables tyranny. Don't enable tyranny.)
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To: blam

Same with BP2, Natural Born 54 and many others. You’d think if they were taking a leave of FR they’d say so so we wouldn’t be left worrying.


49 posted on 02/06/2013 12:06:58 PM PST by bgill
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To: blam

Thanks blam for the heads up!
The Economy just might go Bottoms Up.
Scared and shaken now with fright,
Knowing that our politicians might,
Wait to watch the Treasury Bubble burst.

As we lemmings our trust must hinge,
President Jarrett will have her REVENGE!


50 posted on 02/06/2013 12:15:45 PM PST by Graewoulf ((Traitor John Roberts' Commune Obama"care" violates Anti-Trust Laws, AND the U.S. Constitution.))
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